Recent Posts

Morning Quantquake

“This job is easy, all you have to do is forecast the oil price right.” In this note we argue that the most expensive group among the oils will run here, based on the recent market “Quantquake” that we outline in this note. What was the Quantquake? Last week saw an extraordinary move in markets. And from this we derive a trading recommendation into year end. There is more to short- and medium-term investing than […]

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8:26 AM

Thematic: the E&P Inventory Underhang

There was plenty of client interest in a comment we made a while ago now, say Q1 2022, that US exploration and production (E&P) companies have become homogenized in terms of what they offer shareholders, as basically all corporate strategies now have, thankfully: Focused on returns and so capital discipline, and Reduced growth to the benefit of market supply & demand balance. Those that cannot resist growth are private or have gone private (Continental Resources) […]

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5:39 PM

Sunday Penguins

Week ahead: Fed decision and plenty of earnings. Last week was a big one for markets, to say the least. Mega-cap tech bombing the tape. Worked out great for the oils and energy. A client said my chart of oils’ share of market earnings are too low: I have the group at 5% of the S&P500, but 10% of the earnings of the market, he is getting energy earnings at 15% of the market, which […]

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6:27 PM

Sunday Shares & Sheeran

Greetings from Texas, The world’s biggest mangrove company kindly invited Paty & me to the Austin Formula One Grand Prix (F1). Cars running E10 are screaming behind me on four source power trains; (V6 1.8 liter, one electric exhaust powered, one electric latent braking powered, and a turbocharger). The world’s biggest mangrove company is Aramco, F1 primary sponsors for this race. I think the sponsorship is genius in increasing the popularity of the world’s greatest […]

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4:19 PM

Thematic: East Med, EU Gas Crisis Solution

With attention on a major oil announcement by President Biden today, widely leaked as a further Strategic Petroleum Reserve (SPR) release that amounts to stuffing a leaking dam with non-sustainable paper towels, we have been highly critical of the Biden Administration’s Energy policy. We have also slammed the European Union and UK, notably starting with our 2021 thematic note “Britain & Germany vs the USA” that foresaw a European gas crisis far before Russia ever […]

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8:56 AM

Morning Idi

Gossip from dinner with my London lawyer friend who is familiar with, let’s say, “emerging markets law”: Russia’s power rests between the Oligarchs who have the money, vs the military, that have the weapons. The single crossover oligarch, who controls the military, is Putin alone. Can the oligarch class form an ex-Putin alliance with the military? Difficult. Rational analysis of Nordstream pipeline explosions, which logically would conclude that Poland done it, with NATO deep state […]

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6:28 AM

Saturday Sunday Sankey

Your correspondent is flying tomorrow at 7am La Guardia to Houston for Steve Chazen’s Memorial at 2pm assuming flights co-operate, and so this week’s Sunday is here on a Saturday; a brief highlight reel, or should that be “bloopers” “fails”, and “cringe” in this tape. From the UK pound, to Japanese Yen, to Credit Suisse credit default swaps (CDS) this is a market at war with itself, quite literally. The incredible sabotage to the Nordstream […]

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7:58 PM

Morning Scope 4

Brooklyn Cop at 844th Precinct accuses innocent Sankey of being “weird-looking” “They” got caught speeding yesterday: fast unwind of long natgas / short refining trade Terrific Happy Hour with Jay Saunders and a couple of other hitters last night; introducing Scope 4 Jennison portfolio manager (PM) Jay Saunders is very popular in the market, you can tell that by the players that dialled in to participate in his call yesterday. He co-runs the Jennison Natural […]

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9:30 AM

Sunday Gold Delivery

Fed decision this week. TINA is dead. Nothing big in earnings this week, Fedex reporting Friday has warned, in case you totally missed last week; if you did, you missed the largest stock market move on an economic data point, in history Rules of Wall St series: Always short the new CEO of a highly rated stock. Not in the news: Iran’s Supreme Leader said to be gravely ill – watch for upheaval ~ Fed […]

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6:19 PM

Morning IRA… the IRS Inflation Act

Observations on the “Inflation Reduction Act”: We read all 730 pages, with 198 being on healthcare, and conclude that, rather than calculate an “Excel told me” analysis, but rather, because of the surprise announcement of the Bill, the stock market provides an early indicator of the Bill’s likely impact: we show you key stock price performance since the Bill was shock-announced by Senators Manchin & Schumer on June 27th: We temper this market reaction. We […]

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8:36 AM

Sunday CRC

I asked a major activist investor if I should zip over to Denver this week for the Enercom conference, (starts tomorrow). It’s a staple of the August energy conference diet, which is not a rich diet. Enercom, you pay to attend and a plethora of smaller oil & gas exploration and production companies make presentations with meet & greet. I’ve been once and a client told me as I headed there, the first time he […]

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11:41 PM

Sunday Carnasie

Big week for what should be terrific oil earnings this week. Watching Iraq Highlight charts – market rebounding, oils catching a bid ~ Week ahead: It’s good to see that oil earnings have worked back onto generalist earnings calendars, as shown from “Earnings Whispers” below. Devon aftermarket Monday sure, BP, Marathon Petroleum and Oxy Tuesday, etc, but believe me, a year ago Berry and Callon did not make these lists (see Wednesday below). Marathon Oil […]

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4:11 PM

Say what? Not there yet… Q2 2022 so far

This note outlines the mega-themes that are emerging mid-way through oils’ reporting season. We listened to a lot of calls, read A LOT of transcripts, and distill it here, for your Saturday afternoon reading by the pool on your yacht. Last evening I reflected that this weekend I was as likely to bit hit by a massive piece of falling Chinese space debris, as to win the mega-millions and get my own yacht with pool. […]

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2:52 PM

Sunday In Space

Greetings fellow earthlings, (Dow Jones WSJ 7/17/22) — Investors hoping a strong start to earnings season would jolt the stock market from its slump haven’t gotten much satisfaction. Early reports from U.S. companies have refocused attention on some of the biggest challenges facing businesses, from the threat of an economic slowdown to the pressure that rising costs are putting on corporate profits. JPMorgan Chase, Delta Air Lines and industrial supplier Fastenal are among those last […]

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3:43 PM

Morning SPR

Good to see oil holding, we have broken the bottom of our $110/bbl-$150/bbl range for Brent this summer, but news out of China is positive both in terms of higher oil demand and re-iterated low oil product export quotas. These product export quotas are some 40% below last year levels and underline that Beijing is moving away from energy-intense processing and exports, prioritizing its own air quality and environmental issues. Quotas are cut from 37Mt […]

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9:24 AM

Sunday Brooklyn Heights

Back in Brooklyn, Happy July 4th weekend, insert my annual joke about my not recognising US independence, or Make America Great Britain Again. Harry and Meghan’s second kid is eligible to be a female US President, being born in California. Based on the recent candidates, not just the winning ones but the primaries, just about anybody will do better than the current political class. Enough, let’s take a quick look at the first half. As […]

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1:30 PM

Morning Mr Jones

Briefly noted: Gazprom shares plummet -25% as shareholders reject record dividend plan Uniper, largest German buyer of Russian gas, shares plummet -18% as it says it is receiving just 40% of volumes ordered from Gazprom After two weeks in the dark, with no weekly oil data published, the US Department of Energy released the backlog yesterday. The DOE was keen to stress the “systems outage” was not a hack. Better not be, DOE manages emergency […]

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8:08 AM

Morning Hyde Park

Greetings from Hyde Park, We are back in London, Paris was controversial; Patricia considers it the greatest most wonderful place on earth, I get into arguments with Parisians, Selloff dynamics Hess reminder Phillips 66 Comments Morocco? Algeria It’s only rock ‘n’ and I’m 80 On the selloff: To me, the charts are not broken, but we nibbled 5% of the S&P500, then collapsed back to just over 4.1%. It is actually barely visible on the […]

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11:47 AM

Morning Chefchaouen

Action items: Every house in Morocco has a flat roof – but there all-but no visible solar. The projects here are mega; centralised. In Mexico you see a lot of panels. Our overall thought/dream has been that almost everything that uses energy should have a booster solar panel on it, attached to a battery. A “US Solar Buyer Consortium” is open-bidding $6bn for 7GW of US-built panels. Stalking horse to justify solar panel imports? Sure, […]

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6:52 AM

Terribly sorry, but what is the speed limit?

Tomorrow Zoom Strategy Session: Rich Voliva, CFO HollyFrontier. Thursday Jun 9, 2022 05:00 PM ET Register in advance for this meeting: https://us02web.zoom.us/meeting/register/tZ0kduyprj4uHNTcVO53YRKHbhYSRWHUiIX1 Tonight, quick meeting with Uzi, and Blake, CEO and IR of Delek. I had texted about the story in Tradewinds that they were getting into Jones Act shipping. Apparently they bought a couple of barges that are “not material, especially not in the context of today’s margins”. Lucked into a quick catch up […]

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8:55 AM

Sit Chat Get Banged

Strategy Session was back to the round table stock discussion. It was sufficiently enjoyable that we will now have a monthly round table on stock ideas. Next week we have Tourmaline, week after Bob McNally. In between, Memorial Day is a week Monday, check the whites in your wardrobe and start yelling at the pool guy’s voicemail. Companies mentioned last night: Long Inventory E&P’s. We discussed oil volatility and beta skew as oil holds over […]

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10:47 AM

For Love & Money: Chazen Time

Recommending BUYBACK PLAYS in this tape. We love the Diamondback approach of buybacks when the stock is cheap, specials when the stock is expensive. PREMIUM EVENT Sankey Strategy Session: Kaes Van’t Hof – President and CFO, Diamondback Energy This Thursday May 12, 2022 05:00 AM US Eastern Time. Register Here: https://us02web.zoom.us/meeting/register/tZ0rcuyorD8rEtFYFdOdB79bWBSDY7MFzYzP ~ Legendary oil executive Steve Chazen on yesterday’s Magnolia $MGY conference call; “I think that the re-evaluation of the industry from 4% of the […]

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8:52 AM

Portfolio Manager Special: Sunday Calls

Few, As they say on the internet. Today we have a PORTFOLIO MANAGER SPECIAL in the presentation, which includes a full glorious ppt on the largest stocks in the market, and for bonus, a Sankey Recommendation on each stock. The oils look great on these charts. The recommendations on names like Google (BUY) or Disney (SELL) are purely quanatitive interpretation of charts, we do not cover non-energy related stocks fundamentally. So this is quantitative analysis, […]

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12:55 PM

Fear of Market Collapse (FOMC) Day

Sankey Strategy Session tomorrow evening: Bob Jonke, Oil trader for Engelhart CTP and Kathleen Kelley, Oil Market Expert aka “the OPEC Whisperer”. When: May 5, 2022 05:00 PM ET, Register in advance for this meeting: https://us02web.zoom.us/meeting/register/tZcofuqprzMuHd0CDoGbkzN6CiapFAdCg6k2 The Strategy Session this week will be in the context of what will be an extremely low-key OPEC meeting tomorrow with no press conference. Why no press conference? No comment on Russia. Simple as that. Bloomberg 5/4/22 The European […]

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8:14 AM

May Day Sunday Sankey 5/1/22

Happy May Day Sunday, Today in partnership with Greg Bordelon of Isentropic Capital, we publish a note on natural gas markets by way of thesis overview to a theme that we will continue to pursue. The note is long graphics, and particularly interesting on US markets. If you only want to read half, read the second US half. It is as noted graphic intense. European gas markets are fundamentally far more un-analysable than US right […]

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2:48 PM

You said that; Hess, Antero, Suncor

First quarter reporting season is always a crazy flurry, and this one is no different. To add to the excitement, just as I sat back yesterday having published on Antero, news broke that Elliott Associates had gone activist on Suncor. We had Hess IR Jay Wilson on Strategy Session. Hess could be worth $200/share on a five year view, at $100/bbl oil. For sure, Guyana is just about the only major global oil supply growth. […]

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9:03 AM

LNG: Gordon & Gorgon

This LNG round up with Gordon Shearer (Poten & Partners guru) from Thursday night took longer to write and I got tangled in the SLB results, which came in okay – readers will know I am not pushing service companies but love oils… “to 10% of S&P500!” Chatting to a client with Midstream expertise before Gordon Shearer, LNG expert, came on Strategy Session Thursday evening, the view was that Kinder Morgan results were decent owing […]

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5:43 PM

Mega-Bear Call: Oil to 10% of SPX

Yesterday on CNBC I repeated the call that oil could get to 10% of the S&P500 based on the current dynamics in global energy. In the segment (link below), which was in the context of Netflix stock collapsing 35% yesterday (down hard further in the pre-market today), I gave a hack explanation of how a growth stock valuation can collapse. Basically, if the market is anticipating huge growth in a zero interest rate environment, the […]

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9:42 AM

Iraq and a Hard Place

This note starts with some near term Iraq production and export analysis, and works backwards through the short term political history, and long term political history, of the country, in the context of oil. Bottom line, Iraqi political instability continues, but oil production has steadily risen over the past 15 years to around 4.3mb/d – an all-time historic high for Iraq – and can likely rise a few more 100kb/ds, certainly in the medium term. […]

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8:52 AM

Oil’s share of the SPX

Ripper chart, most bullish I have seen in 30 years following US E&P – quant analysis. Any chart available on request, any stock in the market… Share of S&P500 market cap vs share of S&P500 earnings. Black line is sellside. Blue line is buyside (share of market cap). Buyside is smarter than sellside, read the charts. Mi amigo US E&P, chart most bullish in history; Oxy, PXD, COP, FANG, APA, Hes.. Unprecedented bullish chart, buy […]

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5:05 PM

$COP a load of this

Tomorrow Thursday 7th April, Strategy Session with PBF Senior Management 5pm – RSVP Today DC hearing, House Energy and Commerce “Gouged at the Gas Station: Big Oil and America’s Pain at the Pump.” ExxonMobil 8k indicates $2bn increase in upstream earnings, beermat (see below) suggests $2.50 EPS Cocktails with ConocoPhillips management yesterday evening Starting with ExxonMobil 8K on earnings guidance released yesterday evening, I am chatting to them today. The company gives you what they […]

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10:00 AM

Zen and the art of refining maintenance

This Thursday 7th April, Strategy Session with PBF Senior Management 5pm – RSVP Tonight – ConocoPhillips senior management in town for informal sellside drinks Tomorrow, DC hearing, House Energy and Commerce “Gouged at the Gas Station: Big Oil and America’s Pain at the Pump.” In oil, the excitement this morning is New York jet fuel prices going off the scale, part of the theme we talked about over the past couple of weeks, especially after […]

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9:20 AM

Sunday CPC

In the drama of the week, we never got to publish the dreaded and yet celebrated “Sankey Porcupine” charts that reveal the key message from two analyst meetings last week, Chevron and ExxonMobil, in four charts: capex and volume targets. We do that in this note, and cover Chevron risk in Kazakhstan. Do NOT try to pick the top in this oil & oil equity market; there could be a long way further up to […]

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2:32 PM

Morning Strategy 3/3/22

Strategy Session Tonight, Mark Viviano & Megan Hays of activist Kimmeridge. A former Portfolio Manager at mega-player Wellington Management, Mark leads the first public/private active funds at Kimmeridge, one of the top activist managers in the oil space. Megan Hays has joined Kimmeridge after 15 years of IR experience including Concho and Cimarex, and even allowing for that length of experience, still recently rated as one of Hart Energy’s “40 under 40.” Please click this […]

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9:00 AM

Vlad the Impaled

Extraordinary times: In the great energy regression that has massively further regressed with the Russian invasion of Ukraine, it was somewhat surreal to watch Chevron’s Colin Parfitt (VP Midstream) conclude at the company’s analyst meeting yesterday at the NYSE, that we need more export capacity in the US, particularly for natural gas, and for the company then to confirm $10bn of spending on New Energy Ventures over the next decade, on hydrogen, carbon capture, and […]

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8:37 AM

Chevron-REGI

We have been pretty rude about biodiesel, because it makes no money. Things should get worse. So Chevron’s decision to buy major biodiesel player Renewable Energy Group (REGI) was greeted with quite the lack of enthusiasm by us and indeed from other analysts on their deal call today. We were presented with a deal at over 10x EV/EBITDA that would make perfect sense, apparently, based on 2025 multiples. Assuming… a bunch of assumptions Chevron were […]

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1:11 PM

Devon & the Wall of Fear

Strategy Session this week: Doomberg 2/17, 4:30PM EST –  Click Here to register A bull market climbs a wall of fear, a bear market descends a slope of hope. With oil prices in the $90s, for oil investors traumatized by a decade of descending a slope of hope, are now climbing a wall of fear. The thinking goes like this: “Brent is at $90/bbl on a Ukraine invasion story that is de-escalating, sell quick, lock […]

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8:27 AM

I just dropped in…

Hi I am just checking in to assure you I survived the Houston NAPE conference, landmen and all, but am still on the road, headed to New Orleans. This week has been discombobulated – my initial flight on Tuesday was cancelled by United, I rushed to Newark, made the 2pm, just made dinner in Houston, made the NAPE conference yesterday, made dinner with a Nebraska CEO, went to the after party rave and here I […]

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10:50 AM

Aaand… it’s gone. And you owe tax.

Strategy Session this tonight 4:30pm with Joe Gorder, Valero Chairman & CEO; Lane Riggs President & COO; Jason Fraser, EVP, CFO; Homer Bhullar, VP IR & Finance. https://www.sankeyresearch.com/2022-refining-conference/ After big volume (Permian) growth numbers from ExxonMobil and Chevron over the past week, today ConocoPhillips held the line with capex guidance in line with previous guidance at $8.2bn. CEO Ryan Lance has said that the company will grow when there is no spare capacity in the […]

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9:39 AM

The rage of the Intelligent Investor

What’s going on the market? The Intelligent Investor is back from extended sabbatical and he/she/they is furious. Key current trading ideas: Long Shell into results tomorrow. Long Suncor into results tonight. Stock has lagged CNQ badly, one month, three months, six months, one year. We had strong downstream chat from Suncor’s EVP of downstream Kris Smith on our refining conference, which continues tomorrow with Joe Gorder’s Valero, RSVP. SU has key differentiation from CNQ in […]

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9:33 AM

The Big Unit is back

Strategy Session this Thursday 4:30pm with Joe Gorder, Valero Chairman & CEO; Lane Riggs President & COO; Jason Fraser, EVP, CFO; Homer Bhullar, VP IR & Finance. Joe has overseen enormous success as CEO of Valero overseeing a cumulative return since he started in 2014 of 94% for Valero stockholders. Not only does Joe lead the world’s largest independent refiner, he has also built the largest producer of renewable fuels in the US. All the […]

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8:53 AM

Sunday Sankey 1/30/22

Before we argue that Big Cap tech can stabilise the market here, on a fast & personal take of last week’s and next week’s earnings, in recognition that we need to focus on mega-themes, the latest population data from China is extremely important. NYT January 17th, 2022: China announced on Monday that its birthrate plummeted for a fifth straight year in 2021, moving the world’s most populous country closer to the potentially seismic moment when […]

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4:41 PM

Sunday Sankey 1/23/22

In the war of the market, we have reached a crucial battleground: the 200-day moving average on the S&P500. Do we hold, do we bounce, do we break? That is pretty simple; we broke the 200 last week. Re-gaining it will be a battle. And by the way, we broke the 200-day on the Nasdaq like throwing a crystal decanter against a brick wall. The market went through the NASDAQ 200 like a falling chain […]

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2:52 PM

Sunday Boxing

Happy Boxing Day, The name Boxing Day being for boxes given to servants for their big day off: 26th December. My servants are all off, so here I am. So; we start the year with Refining conference, we continue to watch Washington which has to get some legislation done; it may not, as the split in the Democrat Party might almost be terminal. The Progressive vs Moderate split goes to the heart of the current […]

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1:43 PM

OPEC Happy Hour? Yikes!

OPEC tomorrow: Joint Ministerial Monitoring Committee (JMMC) 7am ET; OPEC+ meeting 8am ET Woah it seems the chat from OPEC is they may just stick with the plan. That is, there is potential for an INCREASE in line with the 2021 plan tomorrow. This in spite of Joint Technical Committee (JTC) showing a massive excess of oil in Q1: LONDON, Dec 1 (Reuters) – OPEC+ sees the oil surplus worsening to 2 mbpd in January, […]

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7:15 PM

Me and The Big Unit; XOM History

Busted flat in Baton Rouge, waiting for a train… ExxonMobil has called a historic snap analyst meeting for this Wednesday 1st December. The first meeting under a new, externally appointed, CFO, former Diageo executive, Kathryn Mikells. She is now in charge of finance, strategy, communication, and investor relations (IR). Kathy already refreshed her first earnings call, Q3 2021, interjecting, freely commenting, communicating; the company also gave clear guidance over what to expect from this update […]

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11:01 PM

Letter from the Front Line 11/28

Very tricky to call, indeed! OPEC/Saudi surely will act if markets don’t bounce – my Middle East Intelligence says Saudi is worried about the price but wants to see the market follow through Monday. Fascinating real-time week coming up, we think there might be a unilateral cut by Saudi if the market continues to collapse. But for OPEC to do a cut, is extremely complicated. The easy out, given they have to do something unless […]

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4:36 PM

Sunday Bets

Presentation today, and commentary below: Thursday evening annoucement: major sellside meeting by ExxonMobil: “updates to their company plan” on Wednesday December 1st. Sellside invited. Virtual. Big deal for ExxonMobil. We had pondered how ExxonMobil would manage their annual capex announcement, due in December, vs their traditional strategy update due next March. We pondered if plans would be ready in time for a December update, given the scale of board and management change that has occurred […]

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3:55 PM

Saturday Stories: Shell at the St Regis

Continuing our Saturday history series, a single story about what I learned at the St Regis hotel in January 2004: Bad corporate newsflow comes in waves Good management get on great with their employees Don’t be emotional in business; this is the big leagues In 2004 I found myself at the St Regis Hotel, the classic Big Oil event venue in Midtown Manhattan at Park Avenue and 51st, at a major Shell event. I was […]

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2:30 PM

Morning Bundesnetzagentur 11/16/21

BREAKING Major European gas news, Germany regulator suspends approval of Nordstream 2. Bullish news on Shell Corning glance on high glass prices BREAKING Watchers.News: Natural gas prices in Europe soared again on Tuesday, November 16, 2021, as the German Federal Network Agency — Bundesnetzagentur — suspended the process of certifying the new Russian gas pipeline called Nord Stream 2. The pipeline was completed in September 2021 and is designed to bypass Ukraine and connect Russia […]

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8:57 AM
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